Nonmarket Strategy Research Articles

Strategic Philanthropy: An Investigation of Political Connection and Corporate Giving in Korea

Despite extensive interest in nonmarket strategy, not much attention has been paid to the relationship between corporate political activity and corporate social responsibility. Building upon the th...

Are Market and Nonmarket Strategies Complementary in Contributing to Firm Performance?

In this paper, I study whether CPA and innovation positively interact in contributing to firm performance. Viewing CPA as a nonmarket strategy, I suggest that it works for nonmarket environment and not the market where the transactions that bring firm revenue happens. CPA provides a favorable environment for firms market activities, enabling the firms to gain high profit from their market activities, but does not generate the profit directly. Therefore, CPA should interact with market strategies in affecting firm performance. I also examine whether the interaction between CPA and acquisition, which is suggested to have a similar nature with innovation in the essay, positively influences firm performance. The hypotheses are tested using US pharmaceutical industry data. Results provide support for the interactive effects.

The Moderating Role of Market Strategy in Explaining CSR-Performance Link: A Multi-level Model

Existing studies on the relationship between corporate social responsibility (CSR) and performance have mainly taken a macro perspective, focusing on how CSR influences the external stakeholders. However, the approach has relatively underexplored the role of internal stakeholders (i.e., employees) which function as an intermediating mechanism of the CSR-performance link. Utilizing the 4-wave longitudinal survey data of approximately 3,500 employees in 520 branches as well as archival data from one of the largest Korean commercial banks, we examine whether the relationship between CSR and performance is mediated by employee engagement, and further examine if market strategies such as customer and competitive orientation moderate the mediation. Our results show that employee engagement mediates the CSR-performance relationship, and each market strategy differentially moderates the mediated relationship. The customer orientation strategy strengthens the positive influence of CSR on employee engagement and performance, whereas the competitive orientation strategy makes the positive influence of CSR disappear. Our findings suggest that the firm can maximize the financial return from CSR through engaged employees when CSR as a non-market strategy goes hand in hand with the market strategy.

Government Contracts and Firm Boundary in Political Activities

Prior research shows that political capital is critical in business-government relations to achieve desirable nonmarket strategy outcomes. Less attention has been paid to the fact that firms vary i...

Searching in the Non-market Environment: The Impact of Regulatory Search on Firm Innovativeness (WITHDRAWN)

This paper investigated the relationship between regulatory search and firm innovativeness in a contingency framework. First, regulatory search was conceptualized as a non-local and exploratory knowledge acquisition capability in a firm’s non-market environment, specifically, the regulatory environment. Second, a self-developed scale was used to measure regulatory search and the results suggested that the non-local search conducted in the regulatory environment formed two independent factors, namely, reactive and proactive regulatory search, aligning with firms’ non-market strategies of positive anticipation/compliance and proactive participation/influence respectively. Third, a contingency analysis of the regulatory search-innovativeness link conditioned on a firm’s internal resource munificence (proxied by slack) was conducted. We found that slack moderated the relationship between the two regulatory search factors and innovativeness in different manners. Specifically, under a high (low) slack environme...

Increasing Managerial Discretion in Regulated Markets: The Nonmarket Strategy of Former Monopoly

We examine how top management teams can extend their managerial discretion over time. The extant research establishes that regulatory environment constraints managerial discretion. As the effect of...

Antecedents and Outcomes of Political Tie Intensity: Institutional and Strategic Fit Perspectives

Although international nonmarket strategy research has highlighted the importance of political ties, it is still unclear why some foreign subsidiaries are more politically active than others and what conditions may render political practices beneficial in a host country. We argue that foreign subsidiary political tie intensity—the extent to which senior managers provide time and resources in informally dealing with government officials for nonmarket purposes—will be influenced by political institutions in their parent's home country, especially when the MNE parent attempts to protect foreign subsidiary resources. Additionally, we assert that fit between a parent's home country political institutions and foreign subsidiary political tie intensity will positively affect subsidiary performance. We employ primary data collected from 181 foreign subsidiaries in the Philippines and find support for our hypotheses. This study advances international nonmarket strategy research by highlighting how an MNE's home country political institutions shape subsidiary political networking and strategic performance outcomes in host country environments.

Nonmarket strategies predictors for foreign firms

This paper explores the preference of firms to use a particular type of proactive nonmarket strategy in a host environment and to identify which firm’s resources and role are underlying the preference. Based on international business, resource based view, and corporate political strategy literature, we identified specific firm’s resources and roles which are most likely to affect the predilection for implementing a relational or a transactional nonmarket strategy by firms in a host environment. Evidence is provided by a survey sample of foreign firms operating in the Netherlands. It shows that firms do not prefer to use these proactive nonmarket strategies simultaneously. The results also show that firms enjoying high visibility and with a host country’s market focus are more inclined to implement a relational nonmarket strategy, while firms with a regional headquarters role and high host country experience prefer more to use a transactional nonmarket strategy instead of a relational one.

Strategic Silence: Withholding Certification Status as a Hypocrisy Avoidance Tactic

We examine why organizations that obtain prominent certifications may at times elect not to publicize them. Drawing on the impression management literature, we argue and show that concerns about being perceived as hypocritical may cause organizations to strategically withhold their certification status. Using a longitudinal panel of corporations that were members of the Dow Jones Sustainability Index, a prominent environmental certification, we show that in the face of reputational threats, organizations are less likely to publicize their certification status when the threat appears to directly contradict the claims implied by the certification. Our findings suggest that the threat of hypocrisy is amplified for firms with stronger reputations in the same domain as the certification and when audience members better understand and value the certification. Our findings delineate new boundary conditions under which firms will make prosocial claims and inspire reconsideration of long-held assumptions about the process of decoupling the implementation and communication of socially valued practices. This study also provides insights for scholars of nonmarket strategy on how corporations strategically communicate with external constituents about their sustainability initiatives.

Market and Policy in Argentina: Exploring the Non- Market Strategies and Government in A Hybrid Regime

<p>This paper investigates the nature of non-market strategies in the case of expanding business in Argentinian. Result of the enquiry presents a new conceptual framework that allow us to understand the Argentine reality in a proper manner. The full investigation suggests that in other countries the non-market strategies are being studied, without establishing a discipline. Academic material and specific courses have been developed in the business schools of the universities, but, except in specific and small cases, there is no research field and cases developed in Argentina. The expanded research hypothesis argues that companies in Argentina do not understand how to approach the political decisions of the State of hybrid political regimes in matters that concern them. Companies focus on market logic without understanding the logic of "non-market" environments. </p>

The Politics of Tobacco Control: A History of the U.S. Tobacco Industry

Describes the history of the tobacco industry and its emergence as an extremely effective marketer and non-market strategist. After years of success, both publicly and politically, the leaders of the tobacco industry are faced with mounting political pressure and the financial threat of litigation from class-action lawsuits. The leaders face an industry-wide strategic decision of whether to acquiesce to government demands in exchange for immunity, focus on judicial success, or develop a new course of action.To evaluate the formulation and implementation of non-market strategies in the context of regulatory, legislative, and legal institutions. To understand how various aspects of the non-market environment interact and how these environments not only change over time, but change market competition within an industry. Further, to formulate and decide between firm-specific and industry-wide strategies. Finally, to appreciate and reflect upon the potential conflict between non-market strategies and ethical concerns.

Leclerc: The Growth Challenge

The senior management team at Leclerc, one of the largest retailers in France, is considering how best to maintain growth in the highly regulated French retail industry. Strict limits on pricing and store construction will significantly limit Leclerc's flexibility; many of the traditional growth levers cannot be used. These regulations also have a major impact on competition. The executives at Leclerc must identify the optimal growth plan and then consider whether it will deliver the desired growth.The case can be used to examine three areas: growth strategy for established businesses, non-market strategy, and marketing planning. It provides an interesting look at the French retail industry and highlights the role of government regulations in shaping the competitive playing field.

Conseco Senior Health Insurance: A Strategic Problem of Reputation and Regulation

In 2007 Conseco's CEO, C. James Prieur, faced a complicated set of problems with his company's long-term care (LTC) insurance subsidiary, Conseco Senior Health Insurance (CSHI). CSHI faced the threat of congressional hearings and an investigation by the U.S. Government Accountability Office, triggered by an unflattering New York Times article alleging that CSHI had an unusually large number of customer complaints and was denying legitimate claims. This threat came in addition to broader systemic problems, including the fact that the entire LTC industry was barely profitable. What little profitability existed was dependent on the goodwill of state insurance regulators, to whom the industry was highly beholden for approvals of rate increases to keep it afloat. Furthermore, CSHI had unique strategic challenges that could not be ignored: First, the expense of administering CSHI's uniquely heterogeneous set of policies put it at a disadvantage relative to the rest of the industry and made rate increases especially necessary. Second, state regulators were negatively predisposed toward Conseco because of its notorious reputation and thus were often unwilling to grant rate increases. Finally, CSHI was dependent on capital infusions totaling more than $1 billion from its parent company, Conseco, for which Conseco had received no dividends in return. Faced with pressure from Conseco shareholders and the looming congressional investigations, what should Prieur do? Students will discuss the available options in the context of a long-term relationship between Conseco and state insurance regulators. Prieur's solution to this problem proved to be innovative for the industry and to have far-reaching consequences for CSHI's corporate structure.After reading and analyzing this case, students will be able to: evaluate the impact of a regulatory environment on business strategy; and assess the pros and cons of various market strategies as well as recommend important non-market strategies for a firm in crisis in a highly regulated industry.

Nonmarket Action and the International Counter-Money Laundering Act (H.R. 3886)

The case describes the international problem of money laundering and summarizes U.S. bank regulations aimed at reducing money laundering activities. The introduction of H.R. 3886 in 2000 was one in a series of attempts to formalize U.S. banks' monitoring of their customers. The bill was prompted by a government report that named and criticized U.S. banks for laundering billions of dollars linked to drug trafficking, fraud, and organized crime. Interest groups in favor of H.R. 3886 were predominantly law enforcement agencies that viewed current anti-money laundering laws as ineffective. Groups opposed to the bill included the American Civil Liberties Union, which believed that the collection of more information about bank customers' activities was an invasion of privacy, and the American Bankers Association, which claimed that the legislation would impose unnecessary costs on banks. The case can be used to introduce the distributive politics framework for analyzing non-market issues and formulating nonmarket strategies in the context of government institutions. The epilogue reveals that H.R. 3886 died before it ever reached the House floor, but that an expanded version of the legislation ultimately passed---with the support of stakeholders who originally fought it---as part of the USA PATRIOT Act after the terrorist attacks of September 11, 2001. This stance reversal provides an opportunity to explore how events, public opinion, and the media can create windows of policy opportunityUtilize a framework for analyzing options for non-market action – Formulate a strategy for nonmarket action – Recognize how public opinion influences the opportunity for non-market action through events and/or new information, political actors, media coverage, and policy windows

The Volcker Rule: Financial Crisis, Bailouts, and the Need for Financial Regulation

In response to the potential collapse of large financial institutions in 2007, the U.S. government committed trillions of dollars to loans, asset purchases, guarantees, direct spending to provide fiscal stimulus, expansionary monetary policy, and bailouts of various private financial institutions. The bailouts were especially controversial because public money was used to protect private financial institutions and their wealthy executives while ordinary citizens received no such protection. One outcome of the government's response was the proposal to enact into law the Volcker rule, which prohibited banks from engaging in proprietary trading, or trading for their own---not their clients'---benefit. Proprietary trading was believed to generate up to 10 percent of total trading revenues, which would have exceeded $5.9 billion in 2010 for the six largest American banks alone. If the Volcker rule were to become law, government agencies, including the Federal Reserve, the Securities and Exchange Commission, the FDIC, and the Office of the Comptroller of the Currency, would write the detailed regulations that would implement the law. These agencies employed civil servants but were run by political appointees with technical backgrounds. After issuing a notice of proposed rulemaking the agencies would solicit comments from the public, which would help shape the regulations. Executives of large banks needed to decide how to respond to this potential change in their business environment.After analyzing the case, students should be able to: Understand and map out the various interests at work in shaping a regulation Develop a nonmarket strategy for a company facing a potential regulatory change Predict the likely outcome of a proposed regulation

The power of the social domain in sustainable development: non-market strategies for generating sustainable competitive advantage

This paper critically reflects on the assumptions and assertions of the social aspects in non-market strategies. There are few papers discussing the social-specific issues and challenges of human and social competition in non-market strategies. The primary objective of this literature review is to investigate the potential of the social domain in non-market strategies to create sustainable competitive advantage. The social domain plays a critical and strategic role to drive competition in non-market and market strategies in comparison to the economic and political domains. Critically reviewing the social aspects in non-market strategies permits reasonably sound inferences about unmeasured social conditions or situations; thus, permitting greater understanding of not only what is happening and where it is happening, but also why it is happening. This paper identifies society's capacity to drive sustainable competitive advantage in comparison to government and business.

The power of the social domain in sustainable development: non-market strategies for generating sustainable competitive advantage

This paper critically reflects on the assumptions and assertions of the social aspects in non-market strategies. There are few papers discussing the social-specific issues and challenges of human and social competition in non-market strategies. The primary objective of this literature review is to investigate the potential of the social domain in non-market strategies to create sustainable competitive advantage. The social domain plays a critical and strategic role to drive competition in non-market and market strategies in comparison to the economic and political domains. Critically reviewing the social aspects in non-market strategies permits reasonably sound inferences about unmeasured social conditions or situations; thus, permitting greater understanding of not only what is happening and where it is happening, but also why it is happening. This paper identifies society's capacity to drive sustainable competitive advantage in comparison to government and business.

Review and Research on Non-Market Strategy of Enterprises Based on Chinese Transition Period

With the bloom of the study of non-market strategy, the field is very complex; the theories are different from each other and there are great differences between Chinese and foreign enterprises. In view of these problems, we combed the relevant literature of non-market strategy of EBSCO and CNKI database from 2006 to 2016, and tried to find out the theoretical perspective of the existing non-market strategy research. Based on this research, we examine the applicability of European and American enterprises' practical experiences to Chinese enterprises and provide practical suggestions and guidance for non-market activities of Chinese enterprises during the specific period of Chinese transition.

Entrepreneurship, Innovation, and Political Competition: How the Public Sector Helps the Sharing Economy Create Value

With the recent growth of the sharing economy, regulators must frequently strike the right balance between private and public interests to maximize value creation. In this paper, we argue that political competition is a critical ingredient that explains whether cities accommodate or ban ridesharing platforms and that this relationship is moderated in more populous cities and in cities with higher unemployment rates. We empirically test our arguments using archival data covering ridesharing bans in various U.S. cities during the 2011-2015 period. We supplement these data with semi-structured interviews. We find broad support for our arguments while mitigating potential endogeneity concerns. Our study has important implications for the nonmarket strategy, entrepreneurship and innovation, and public-private partnership literatures. In addition, our findings inform policy debates on the sharing economy.

Nonmarket strategy research through the lens of new institutional economics: An integrative review and future directions

Research summary:We use a novel theoretical framework to synthesize ostensibly disparate streams of nonmarket strategy research. We argue that faced with weak institutions, firms can create and appropriate value by either adapting to, augmenting, or transforming the existing institutional environment, and can do so either independently or in collaboration with others. We use the resulting typology of six distinct nonmarket strategies to provide an integrative review of nonmarket strategy research. We then extend this framework to examine the choice between nonmarket strategies, arguing that this choice depends upon whether the existing institutional environment is incomplete or captured, and discussing other drivers of nonmarket strategy choice, the relationship between these strategies, and their social impact, so as to provide an agenda for future research.Managerial summary:The pursuit of competitive advantage often requires firms to operate in contexts where existing rules and regulations provide inadequate protection. Disruptive technologies open up new opportunities for value creation, but it takes years before appropriate regulations are introduced. Economic reforms open up new markets, but these are often regulated to favor incumbents and politically connected insiders. In such environments, managers must decide whether to adapt their strategies to the existing institutional environment, devote resources to improve it, or try to transform it altogether. In this article, we develop an integrative theoretical framework that connects and synthesizes research examining each of these options, and offers some preliminary thoughts on how managers may choose among these different approaches. Copyright © 2016 John Wiley & Sons, Ltd.